S&p Global Inc. · NYSE:SPGI
S&p Global — The McGraw-Hill Companies — 2009 Citi Global Entertainment, Media and Telecommunications Conference
32 slides from S&p Global's conference presentation, Jan 7, 2009
Slide 1: 2009 Citi Global Entertainment, Media and Telecommunications Conference
2009 Citi Global Entertainment, Media and Telecommunications Conference January 7, 2009 1 Harold McGraw III Chairman, President and CEO The McGraw-Hill Companies Presented at the 2009 Citi Global Entertainment, Media and Telecommunications Conference January 7, 2009 2
Slide 2: Safe Harbor Statement Under The Private Securities Litigation Reform Act of 1995
“Safe Harbor” Statement Under The Private Securities Litigation Reform Act of 1995 This presentation includes certain forward-looking statements about the Company’s businesses and our prospects, new products, sales, expenses, tax rates, cash flows, prepublication investments and operating and capita
Slide 3: Focused on managing costs and preserving liquidity in this environment
Focused on managing costs and preserving liquidity in this environment • McGraw-Hill took a $26.3 million pre-tax restructuring in 4Q 2008 ($16.4 million, or $0.05 per diluted share after tax) – Mostly for a workforce reduction of approximately 375 positions across the corporation – Also took restru
Slide 4: Strong balance sheet: An MHP hallmark
Strong balance sheet: An MHP hallmark • Cash flow is seasonal: Comes in strongly in second half of the year – No change in that pattern in 2008 • MHP can access the commercial paper market at reasonable rates – Program is backed by a $1.15 billion credit facility which was renewed in fall 2008 7 200
Slide 5: McGraw-Hill Education
Ray Groves named S&P’s first ombudsman • Former Chairman and CEO of Ernst & Young for 17 years until his retirement in 1994; Chairman of Legg Mason Merchant Banking, 1995-2001; President, Chairman and Senior Advisor of Marsh, Inc., 2001-2005 • Ombudsman reports outside of S&P’s business units – Repo
Slide 6: Education is essential in a global economy
Education is essential in a global economy • Convergence of content, technology and accountability has raised expectations about American education • Enrollments continue to rise in U.S. – Pre-K through grade 12: Increased 0.3% to 55.9 million students in current school year; expected to reach about
Slide 7: Investing in digital content and data management for growth
Investing in digital content and data management for growth • Technology creates new opportunities – Diversify the business – Improve efficiency – Create new revenue streams • Delivering dynamic content in a broad array of digital formats – Online courses – iPods – eBooks – CDs – DVDs 13 New ways to
Slide 8: McGraw-Hill Connect offers movies, animation and audio files
McGraw-Hill Connect offers movies, animation and audio files • Learning isn’t linear • Multimedia After watching the content following video, captures answer the related students’ reflection and multiple- choice questions. imaginations and helps them retain information 15 McGraw-Hill Connect offers
Slide 9: McGraw-Hill Connect offers diagnostic tools
McGraw-Hill Connect offers diagnostic tools • Students can evaluate their knowledge of the concepts and fill in the knowledge gaps 17 Good long-term prospects for education market • Promise of technology • Increasing enrollments here and abroad • U.S. must educate its children to remain competitive
Slide 10: College and university business is counter-cyclical
College and university business is counter-cyclical • Steadiest business in education market – High level of recurring revenue for strong titles and subsequent revisions • Expect U.S. college and university market to grow about 3% to 4% in 2009 – Similar increase in 2008 • Digital products will be i
Slide 11: El-hi market will be under pressure in 2009
El-hi market will be under pressure in 2009 • Assuming mid-year state education budget cuts will affect purchasing in the first half of 2009 – Difficult to quantify reductions due to variations in funding practices across the states • Nearly all states have concerns about 2009-2010 fiscal year budge
Slide 12: Outlook for 2009 el-hi market
Outlook for 2009 el-hi market • Open territory school districts more sensitive to economic downturns – More dependent on local property tax revenue – Often delay or minimize expenditures for instructional materials in hard economic times • Currently expect industry’s el-hi sales could decline 10% to
Slide 13: Information & Media
Information & Media 25 Information & Media creating a framework for growth in B2B market • Building on leading industry position where our businesses represent the standard or provide leading benchmarks • Integrating products with customers’ workflow and infrastructure: – Increases diversity – Creat
Slide 14: Challenges for 2009
Challenges for 2009 • 2009 not a political advertising year for Broadcasting • Economic conditions will continue to challenge print 27 Framework for growth: Integrate our products with our customers’ workflow and infrastructure From To Transactional, one-way relationship Value-added relationship; wi
Slide 15: New ways to monetize an audience
New ways to monetize an audience • McGraw-Hill Construction generates premium prices for ads placed in its new video library • Videos are targeted at specific customers 29 New way to package content for greater value, customer engagement • A new program to create widgets for each of our businesses –
Slide 16: A customized experience: J.D. Power Business Center
A customized experience: J.D. Power Business Center • Single integrated platform provides clients self- service tools and more user-friendly experience 31 Modularizing content: Platts’ new micro site • New liquefied natural gas micro site provides targeted information to traders • Real-time tool ena
Slide 17: Financial Services
Summing up for Information & Media • We have created a framework for growth in the B2B market • Digital transformation is creating new opportunities 33 Financial Services 34
Slide 18: Strategic goal: Continued development of diverse, resilient portfolio
Strategic goal: Continued development of diverse, resilient portfolio • S&P reduced dependence on new issue volume in U.S. bond market by: – Expanding overseas – Developing new products and services – Creating a deferred revenue stream by emphasizing recurring annual fees through frequent issuer pro
Slide 19: Strategic goal: An S&P index for all investments
Strategic goal: An S&P index for all investments • In 2008, S&P added to its growing family of indices in: – Equities – Arbitrage – Currency – Fixed Income – Asset Allocation 37 More growth from S&P index services • S&P launched more than 70 new indices through November 2008 – Led to creation of 59
Slide 20: More growth from S&P index services
More growth from S&P index services • Exchange-traded funds using S&P indices have demonstrated resilience in 2008’s volatile market – Declined by only 10% year-over-year to $186 billion at end of November – Broad market measures such as the S&P 500 are down by approximately 40% • Two factors contri
Slide 21: Growth at S&P's financial data and analytics business
Growth at S&P’s financial data and analytics business • Capital IQ, Compustat and ClariFI represent major delivery platforms for providing critical S&P assets to the buy- side, the sell-side and corporations 41 Continue to invest in Capital IQ since acquiring in 2004 • Corporate Tree • Macroeconomic
Slide 22: New screening visualization from Capital IQ
New screening visualization from Capital IQ • New perspective on large amounts of data • Scatter plot chart visualizes sector returns weighted by market capitalization 43 New screening visualization from Capital IQ • One click to visualize median and average returns by sector Median and average retu
Slide 23: Meeting challenge of contraction on Wall Street with new offerings
New screening visualization from Capital IQ • One click to visualize sector returns by beta deciles Median and average returns by beta deciles 45 Meeting challenge of contraction on Wall Street with new offerings • Newest delivery and analytics technology in marketplace • Integrated data model adds
Slide 24: The promise of Fixed Income Risk & Management Services (FIRMS)
The promise of Fixed Income Risk & Management Services (FIRMS) • Creating a portfolio of products and services to meet financial institutions’ need for credit and risk analysis • FIRMS is benefiting from key market trends – Disconnect between price and value for complex securities – Regulatory calls
Slide 25: Leveraging content and technology in a revamped global credit portal
The promise of Fixed Income Risk & Management Services (FIRMS) Pricing S&P Integrated Proprietary Analytic & Credit Portal Services Data Library Models Library Research Services • FIRMS value proposition – Broad and deep domain knowledge-based suite of investor-centered capabilities – Enable risk mi
Slide 26: Using the credit portal to identify exposures in structured transactions
Using the credit portal to identify exposures in structured transactions • Users can drill down to understand linkages and obligor relationships 51 Using the credit portal to identify exposures in structured transactions • Expanded view of securities and participants speeds up portfolio surveillance
Slide 27: How S&P reduces dependence on transaction volume in U.S. bond market
How S&P reduces dependence on transaction volume in U.S. bond market • Growth of non-transaction revenue has helped offset decline in transactions • After nine months in 2008, at S&P Credit Market Services: – Non-transaction revenue was up 8.9% to $969.2 million – Transaction revenue declined 54.2%
Slide 28: Transaction revenue remains wild card in 2009
Transaction revenue remains wild card in 2009 • May have more visibility in 2Q 2009 after the market has evaluated government’s new stimulus packages 55 Assessing the health of the credit markets • We are monitoring: – Cost of interbank loans. LIBOR rate has come down but remains high relative to fe
Slide 29: Assessing the health of the credit markets
Assessing the health of the credit markets • For 2009, S&P estimates: – Maturing of $451 billion of investment-grade bank debt (loans and revolvers), bonds and notes for all financial and non-financial firms issuing in U.S. – $177 billion of speculative-grade debt will mature 57 Measuring legal risk
Slide 30: Measuring regulatory risk at Financial Services
Measuring regulatory risk at Financial Services • Regulating credit rating agencies remains a work in progress – S&P expects regulatory changes and initiatives to continue in 2009 and possibly even next year • S&P is working hard to become part of the solution and is taking its own actions 59 Measur
Slide 31: Measuring legal risk at Financial Services
Measuring legal risk at Financial Services • We think smart regulation will help strengthen financial markets – Would recognize global nature of financial markets and analytical independence of rating agencies and their ratings methodologies • Courts reaffirmed again, this time in Tel Aviv, that rat
Slide 32: 2009 Citi Global Entertainment, Media and Telecommunications Conference
2009 Citi Global Entertainment, Media and Telecommunications Conference January 7, 2009 63